Canadian banks are no fans of cryptocurrency. Of the top five that dominate the Canadian banking industry, three of them have officially blocked their credit cards from being used to purchase cryptocurrencies. This amounts to a not-so-subtle move to discourage their customers from entering the crypto market.
Although each of the “Big Five” banks have made it difficult to buy cryptocurrencies, some have gone further than others. Here’s a quick breakdown.
In February, a Bank of Nova Scotia (Scotiabank) representative announced that they were “carefully reviewing” their cryptocurrency policy. Although no final statement has been made as of yet, Scotiabank has recently moved to block customers from buying cryptocurrencies with their credit cards.
TD Canada Trust
In February, Toronto-Dominion Bank (TD Canada Trust) reported that they would no longer be allowing the use of credit cards to purchase cryptocurrency.
For now, the Canadian Imperial Bank of Commerce (CIBC) has withheld from making an official statement regarding its take on cryptocurrencies. However, last year, CIBC reportedly withdrew its involvement from NextBlock Global Ltd., a major blockchain initiative.
RBC Royal Bank
The Royal Bank of Canada (RBC) has announced that it is willing to allow transactions for the purchase of cryptocurrencies “in limited circumstances,” according to a spokesperson. The announcement coincides with the news that RBC has filed a patent for a credit score system that involves blockchain technology.
BMO Bank of Montreal
Earlier this month, BMO Financial Group announced that they are barring customers from using both their credit and debit cards to purchase digital currencies. This makes BMO the only Canadian bank to officially disclose their refusal to allow debit and Interac Online purchases with their cards.
Is It Legal?
In short, yes. Canadian antitrust laws are unlike those in the U.S. or Europe. There is no restriction against the attempt to form a market monopoly under Canadian law. The terms of the Competition Act dictate what an “abuse of dominance” might look like under sections 78 and 79.
The Commissioner of the Competition Bureau can then engage with the banks to reach a fair and voluntary settlement if they deem that an “abuse of dominance” has occurred. However, at this time, there is no reason to believe that the Competition Commissioner will find the banks in violation of the Competition Act.
As long as the banks can point to their anti-money laundering (AML) and anti-terrorist financing (ATF) regulations, they have a reasonable enough excuse to refuse to deal directly with cryptocurrency exchanges. All they have to do is claim that the assets exchanged on those platforms pose a risk of being vetted for AML/ATF violations.
Despite some reports, the sky isn’t falling for Canadian crypto enthusiasts. In fact, some argue that this might even bode well for the future of the Canadian cryptocurrency market. As more and more traders and investors are obstructed by traditional financial institutions, many will look toward decentralized platforms for solutions.
For example, peer-to-peer (P2P) networks such as LocalBitcoins have seen a recent surge in popularity over the past month as banks continue to crack down. At the beginning of March, LocalBitcoins facilitated just over a $1 million in total trading volume over a three-week period. The following month saw this number increase to more than $7 million over the same span of time.
That Canada’s banking industry is obstructing access to the crypto market may be a blessing in disguise. It is in the spirit of cryptocurrency, as a medium, to encourage greater personal autonomy and to embrace decentralized systems. As investors move their assets away from major banking institutions, we may finally see just that.